Managing Depleting Gold Revenues in Mali: An Assessment of Policy Options
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This paper analyzes the impact of medium-term policy options in the context of gold resources depletion in Mali. Using a recursive-dynamic computable general equilibrium model calibrated to a 2006 Malian Social Accounting Matrix, we assess the impact of gold resources depletion in Mali and two policy options: the adoption of the permanent income hypothesis (PIH) and a "borrow and invest'' scenario consisting at boosting public investment by 5% points of GDP. The depletion of gold resources in Mali would cause a substantial fall in GDP growth, and lead to unsustainable fiscal path if the government were to keep its current pattern of spending. Adopting either the "borrow and invest'' fiscal approach or the PIH is likely to generate higher growth and a more sustainable fiscal framework compared to the status quo.
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